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PLEDGE AGREEMENT
This PLEDGE AGREEMENT dated as of August 29, 1996 (the
"Agreement"), by and between the individual signatory at the
end of this Agreement (the "Pledgor") and Xxxx Xxxxx, Inc. (the
"Pledgee");
PRELIMINARY STATEMENT:
The Pledgor and Pledgee propose to enter into an Executive
Convertible Debenture Purchase and Loan Agreement dated as of the
date hereof (the "Purchase and Loan Agreement"), pursuant to
which, among other things, the Pledgor will borrow the amount
specified at the end of this Agreement from the Pledgee, which
loan will be evidenced by a note as described in the Purchase and
Loan Agreement (the "Note"). The Pledgor is contemporaneously
purchasing an Executive Convertible Subordinated Debenture in the
aggregate principal amount specified at the end of this Agreement
(the Debenture and the Common Stock into which it is convertible
are hereinafter referred to as the "Securities"). To secure the
Obligations (hereinafter defined) under the Purchase and Loan
Agreement and the Note, the Pledgor desires to pledge the
Securities to the Pledgee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and to induce the Pledgee to execute
and deliver the Purchase and Loan Agreement, it is agreed as
follows:
1. The Pledgor hereby pledges and grants to the Pledgee a
security interest in the Securities and the certificates
representing the Securities, and all dividends, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of the Securities (the "Pledged Collateral") to secure the
payment of all obligations of the Pledgor to the Pledgee now or
hereafter existing under the Purchase and Loan Agreement and the
Note (such obligations being hereinafter referred to as the
"Obligations").
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2. All certificates or instruments representing or
evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of the Pledgee pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied
by duly executed but undated stock powers or other instruments of
transfer or assignment, in blank, all in form and substance
reasonably satisfactory to the Pledgee. After an Event of
Default (as defined in paragraph 8 hereof) shall have occurred
and be continuing, the Pledgee shall have the right, at any time
in its discretion and without notice to the Pledgor, to transfer
to or to register in the name of the Pledgee or any of its
nominees any or all of the Pledged Collateral, subject only to
the rights specified in paragraph 4(a).
3. The Pledgor agrees that at any time and from time to
time, the Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action (other
than the payment of money), that may be reasonably necessary or
desirable, or that the Pledgee may reasonably request, in order
to perfect and protect any security interest granted hereby or to
enable the Pledgee to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.
4. (a) So long as no Event of Default shall have occurred
and be continuing and except as may be otherwise provided in the
Purchase and Loan Agreement:
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights and shall be entitled to all
other incidents of ownership pertaining to the Pledged Collateral
or any part thereof for any purpose not inconsistent with the
terms of this Agreement, the Purchase and Loan Agreement and the
Note.
(ii) The Pledgor shall be entitled to receive and retain any
and all interest or cash dividends, as the case may be, paid in
respect of the Pledged Collateral, provided, however, that any
and all
(A) interest or dividends paid or payable
other than in cash in respect of, and
instruments and other property received,
receivable or otherwise distributed in
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respect of, or in exchange for, any Pledged
Collateral,
(B) interest or dividends and other
distributions paid or payable in cash in
respect of any Pledged Collateral, and
(C) cash paid, payable or otherwise
distributed in respect of the principal
of, or in redemption of, or in exchange for,
any Pledged Collateral, shall, to the extent
of such cash, be paid to the Pledgee to pay
interest then or thereafter payable under or
pursuant to the Note, and otherwise shall be,
and shall forthwith be delivered to the
Pledgee to hold as Pledged Collateral and
shall, if received by the Pledgor, be
received in trust for the benefit of the
Pledgee, be segregated from the other
property or funds of the Pledgor, and be
forthwith delivered to the Pledgee as Pledged
Collateral in the same form as so received
(with any necessary endorsement).
(b) Upon the occurrence and during the continuance of
an Event of Default, all rights of the Pledgor to exercise the
voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 4(a)(i) shall cease, and
all such rights shall thereupon become vested in the Pledgee who
shall thereupon have the sole right to exercise such voting and
other consensual rights.
5. The Pledgor agrees not to (i) sell, transfer, or
otherwise dispose of, or grant any option with respect to, any of
the Pledged Collateral, or (ii) create or permit to exist any
lien, security interest, or other charge or encumbrance upon or
with respect to any of the Pledged Collateral, in each such case
except for the security interest under this Agreement.
6. The Pledgor hereby appoints the Pledgee, and any
officer or agent of Pledgee, with full power of substitution, the
Pledgor's attorney-in-fact, with full authority in the place and
stead of the Pledgor and in the name of the Pledgor, upon the
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occurrence and during the continuance of an Event of Default to
ask for, demand, collect, receive and give acquittance for any
and all moneys due or to become due under and by virtue of any
Pledged Collateral, to endorse checks, drafts, orders and other
instruments for the payment of money payable to the Pledgor
representing any interest or dividend, or other distribution
payable in respect of the Pledged Collateral or any part thereof
or on account thereof and to give full discharge for the same, to
settle, compromise, prosecute or defend any action, claim or
proceedings with respect thereto, to sell, assign, endorse,
pledge, transfer and make any agreement respecting, or otherwise
deal with, the same and to take any other action and to execute
any instrument which the Pledgee may deem necessary or advisable
to accomplish the purposes of this Agreement. The appointment
hereby is irrevocable and coupled with an interest.
7. This Agreement shall create a continuing security
interest in the Pledged Collateral and shall (a) remain in full
force and effect until payment in full of the Obligations, and(b)
be binding upon the Pledgor and his or her respective
personal representatives, successors and assigns. Upon the
payment in full of the Obligations, the Pledgor shall be entitled
to the return of such of the Pledged Collateral as shall not have
been sold or otherwise applied pursuant to the terms hereof.
8. In the event of a default as defined in the Note (an
"Event of Default"), the Pledgee may sell (subject to any
applicable securities laws) the Pledged Collateral, or any part
thereof, at public or private sale for cash, upon credit or for
future delivery as the Pledgee shall deem appropriate.
At any sale made pursuant to this Section, Pledgee may bid
for or purchase, free (to the extent permitted by law) from any
right of redemption, stay or appraisal on the part of the Pledgor
(all said rights being also hereby waived and released to the
extent permitted by law), the Pledged Collateral or any part
thereof offered for sale and may make payment on account thereof
by using any claim then due and payable to Pledgee from the
Pledgor as a credit against the purchase price, and Pledgee may,
upon compliance with the terms of sale, hold, retain and dispose
of such property without further accountability to the Pledgor
therefor. Notwithstanding the foregoing, in the event the
Pledgee is the purchaser of the Pledged Collateral, the Pledgee
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shall purchase the Debenture at a price equal to the outstanding
aggregate principal amount of the Debenture, plus any accrued but
unpaid interest thereon.
9. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Pledgor herefrom,
shall in any event be effective unless the same shall be in
writing and signed by the Pledgee, and then such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given.
10. All notices and other communications provided for
hereunder shall be in writing (including telegraphic
communication) and, if to the Pledgor, mailed or telegraphed or
delivered to him or her, at the address last given, to Pledgee by
Pledgor in writing, and if to the Pledgee, mailed or delivered to
it, addressed Xxxx Xxxxx, Inc., Attn: General Counsel, 000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000; or as to each party at
such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with
the terms of this Section. All such notices and other
communications shall, when mailed or telegraphed, respectively,
be effective when received.
11. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maryland, other than
the conflicts of laws provisions thereof. Unless otherwise
defined herein or in the Note, terms defined in Article 9 of the
Uniform Commercial Code in the State of Maryland, other than the
conflicts of laws provisions thereof are used herein as therein
defined.
12. If any provision hereof is or shall at any time be
invalid and unenforceable in any jurisdiction then, to the
fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Pledgee in order to
carry out the intentions of the parties hereto as nearly as may
be possible; and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction.
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IN WITNESS WHEREOF, the Pledgor and Pledgee have caused this
Agreement to be duly executed, under seal, and delivered as of
the date first above written.
WITNESS: Xxxxxx X. Xxxxx, Pledgor
/s/ XxxxXxxx Xxxx /s/ Xxxxxx X. Xxxxx
ATTEST: Xxxx Xxxxx, Inc., Pledgee
/s/ F. Xxxxx Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxx
F. Xxxxx Xxxxxxx Xxxxxxxx X. Xxxxxx
Assistant Secretary Senior Vice President
Aggregate Principal Amount of Note: $535,000
Aggregate Principal Amount of Debenture: $535,000
